Last updated: 28 April 2015
At a glance
- The Scottish Government operates a homeowners support fund to assist those in difficulty with the payment of their mortgage.
- The fund comprises:
- A financial assistance package to advice agencies to enable them to provide advice and assistance to those homeowners facing mortgage payment difficulties.
- A mortgage to shared equity scheme which has existed since 2009.
- A mortgage to rent scheme which has existed since 2003.
- The mortgage to shared equity scheme involves homeowners with mortgage payment difficulties being provided with an equity loan by the Scottish Government. The equity loan will be used to reduce the amount of the mortgage to a level at which the homeowner can afford the monthly repayment. The scheme allows the homeowner to remain in their home.
- The mortgage to rent scheme allows the homeowner with mortgage payment difficulties to sell their home to a housing association. The homeowner will remain in their home but they will no longer be the owner but will become a tenant of the housing association paying rent. The proceeds of sale will be used to repay the mortgage and any arrears.
- The Scottish Government has published a booklet on the schemes.
- From April 2015, Mortgage to Shared Equity applicants must hold 20% or more equity in their home (reduced from 25% previously).
We are supportive of the schemes and worked in conjunction with the Scottish Government in their development.
Why this is important for lenders
Lenders are required to treat homeowners facing mortgage payment difficulties positively and sympathetically and to make possession a matter of last resort. The schemes are consistent with that objective.
While the schemes are voluntary so far as lenders are concerned, it seems unlikely that a court would award an order for possession where a lender had refused to allow a homeowner to take advantage of either scheme.